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July 27, 2017 | 10:34 PM
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28.05.2008A proper estate plan involves more than a Will

If you delay making vital adjustments to your estate plan, you may put your loved ones at risk.


By Toni Case

It’s probably fair to say that the majority of people think estate planning involves drafting a will and perhaps buying life insurance. Unfortunately the checklist of estate planning items is considerably longer than this, and failing to tick all the boxes can produce a raft of unintentional consequences, including a big tax bill for your beneficiaries to pay, delays in probate and even the possibly of having your will contested.

Probably the biggest mistake that people make is placing too much trust in the power of their will. In fact, the will is probably the weakest link in an estate plan, especially compared to the protection offered by family trusts and companies, and even super if structured correctly. Indeed, the beneficiaries named on super and insurance policies will override the terms of the will, and the distribution of assets in a family trust will be determined by the trust deed. Similarly, property that is held as joint tenant will automatically revert to the surviving joint tenant, regardless of what the will might say.

Putting it simply, a more complicated life – both personally and financially - makes for a more complex estate plan. Clearly, a person who has children to other marriages, an ex-spouse or spouses, a greedy son-or daughter-in-law, children under 18, or a family business to pass on is in greater need of an estate plan, than most. However complications can also arise in the most simple of cases when an estate plan is not thought out holistically - for instance, when the distribution of assets across beneficiaries is unequal or set out in a manner that is unsuitable (for example, a non-working spouse receives the house but no ongoing income, whereas a working child receives a super pension).

To some extent, an estate plan lets you dictate proceedings from the grave. As an example, you don’t trust your son-in-law and think he will leave your daughter and take her inheritance. To prevent this, you could set up a Testamentary Trust, which, if drafted correctly, should protect the inheritance from a family law dispute should your daughter eventually divorce her unlikeable other half. Furthermore, the Trust could dictate that your daughter receives her inheritance as an income stream rather than a lump sum, which would also prevent her from blowing it on a frivolous spending spree or a sinking business. In brief, a Testamentary Trust is a trust established under a will, which comes into existence on your death.

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28.05.2008
A proper estate plan involves more than a Will If you delay making vital adjustments to your estate plan, you may put your loved ones at risk.

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